Burch v. Premier: The Liberty Mutual Liaison Expands

On February 19, 2014, the Second Appellate District, Division Three, issued its opinion in Burch v. Superior Court (Premier Homes), (2014 WL 640707) and, in so doing, expanded the prior holding of Liberty Mutual Ins. Co. v. Brookfield Crystal Cove LLC (2013) 219 Cal App.4th 98 (“Liberty Mutual”). The Burch court held all plaintiffs are entitled to seek recovery for alleged construction defects either under the Right to Repair Act (California Civil Code Section 896), or common law claims, including negligence and breach of implied warranties.

Plaintiff, the buyer of a single family home developed by Premier Homes, filed a Complaint alleging causes of action under Civil Code Section 896, et. al. as well as common law claims, including negligence and breach of implied warranty. Developer brought a Motion for Summary Judgment arguing the Right to Repair Act was an exclusive remedy and therefore, precluded common law claims. The trial court in a well-reasoned decision concurred and granted the Motion for Summary Judgment as to negligence and breach of implied warranties causes of action. Plaintiff appealed.

Court’s Rationale:
While the Burch appeal was pending the Liberty Mutual, court had determined Civil Code section 896, et. al., was not the exclusive remedy for an action wherein actual damages were sought in a subrogation matter.
Following the lead set forth in Liberty Mutual, the Appellate Court reasoned while the Right to Repair Act (“Act”) abrogated the holding in Aas v. Superior Court (2000) 24 Cal4th 627, the Act did not preclude common law causes of action for construction defects that have caused damages. Moreover, the Appellate Court reasoned the language of Civil Code Section 897 created an “out” if any alleged defect caused damages. Finally, the court expanded the concept to all actions, not just subrogation cases.

With this issue out of the way, the Appellate Court then moved onto the issues of the negligence and breach of implied causes of action. Finding a basis for support for both causes of action, the Appellate Court reversed the holding of the trial court and ordered the causes of action to be reinstated.

Prior to this decision, defense counsel often argued Liberty Mutual holding should be construed narrowly and perhaps limited to subrogation matters only. This recent decision not only reinforces the position set forth in Liberty Mutual (i.e. that SB 800 is not an exclusive remedy) but also opens the way for all plaintiffs to:

  1. make claims pursuant to Civil Code Section 896 for alleged defects which have not resulted in damages and
  2. under common law for alleged defects which have caused damage.

The Appellate Court, however, did not address to what effect, if any, the statutes of repose set forth within Civil Code Section 896 will have on common law claims.

ABOUT THE AUTHOR: David Ramirez is Senior Counsel at Tyson & Mendes, and primarily represents clients in complex litigation, including construction defect, insurance law, property disputes, and product liability. Mr. Ramirez was recently named as a “Top Lawyer” of San Diego for “Complex Litigation” in the March 2014 issue of San Diego Magazine.

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